Credit Crisis Hitting Home: 'Everybody Cries Together'

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Back in 2006, Stephanie Christmas ran a bustling turf business in Gainsville, Fla., with 40 employees. Credit flowed freely and the housing market was hotter than the scorching summer sun in Florida's 'gator country.

Now that seems like an eternity ago.

Christmas' Hendricks Turf farm, which delivers sod for landscaping projects, has seen business dry up with the housing slump. On top of that, Christmas can't get credit from the bank because her prime source of collateral—hundreds of acres of prime farmland—has lost much of its value with the real estate collapse. The family-run company is struggling to survive.

"I don't think people truly understand the gravity," she says in a phone interview. "Nobody in my generation and even the generation before me has seen hard times, and I don't think it's something they can possibly fathom. You go down to the local diner for lunch and everybody cries together."

As the credit crisis spreads around the globe, it is reverberating back to Main Street in ways never seen before. Financial institutions large and small have grown unwilling even to lend each other money—much less their customers. As such, stories similar to the Hendricks Turf farm are being played out across America.

Although most people who have e-mailed CNBC.com say they've had no problems getting credit, some are feeling strapped. They speak of having pristine credit scores and solid balance sheets—yet hear again and again that there's no money to lend.

One construction company owner wrote about his 60-year-old family business that can't get financing to build. Another businessman talked about having his credit line frozen. Still another, a prospective new home-buyer, related a story of trying to get a new-construction loan and being told that home equity would no longer be accepted as credit towards a downpayment.

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"This crisis affects Main Street more and more everyday," wrote "Dave" from Los Angeles, in a comment about the government rescue plan. "I don't want to see my company, my home equity as well as my 401k wiped out all in one shot if this funding is not approved."

Good Times, Bad Times

Before housing values started tumbling nationwide in 2005 and 2006, business for Christmas' family-run operation was good, almost too good.

"At the end of '06 is when the building really started slowing around here," Stephanie Christmas says. "At that time, it was literally a welcome breath of air. We were all exhausted. You were literally running a race you were never able to win."

But a slowdown turned to a virtual shutdown, and revenue for the company dropped about 70 percent in the two-year span. A staff of 40 will soon shrink to nine.

Simultaneously, the Florida housing market has fallen through the ground, presenting a double-edged problem for Hendricks Turf.

Video: Unclogging the credit markets, with CNBC's experts.

While the company lost business on one end because of the housing decline, it lost access to credit on the other end because its farmland was no longer worth much. It was a rural version of Wall Street's mark-to-market accounting dilemma: How can you mark something to market when there's no market?

"Mark-to-market means nothing now," Christmas says. "It's only worth what someone's willing to pay for it, and nobody's willing to pay for it."

"Where's the bottom for this thing?" she adds. "The problem is, in this area we still don't feel like we hit the bottom. That is absolutely terrifying."

To raise money, Hendricks Turf is holding what is referred to as an "absolute auction" on a 200-acre tract the family owns—awarding the property to the highest bidder no matter the price. It's a risky move that could end up with the land being severely undervalued. But Christmas and her family believe they it's their only recourse because of the lack of available credit.

The hope is not only to generate liquidity for the business but also to set a value for property in the Gainesville area that banks can use as a yardstick to start lending again.

"If this auction doesn't go the way we want it to," she says, her voice taking on emotion, "quite frankly I don't know what we're going to do."

Other Voices

Christmas is hardly alone with tales of credit woes from one end of the country to another.

"Eddie" from Brea, Calif., tells a familiar yet startling story of how even the most qualified borrowers are afforded little or no access to credit:

"Applied for a Super Jumbo Loan with a 735 Mid FICO score, 200K in liquid assets, 500K annual income. 1 million net worth and I was turned down."

And it's not limited to housing-related industries.

After auto companies released dismal sales results yesterday, "CD" wrote of how difficult it is to get car financing these days.

"I work at a dealership and we're having a very difficult time getting GOOD people financed. We had a couple with 750 beacon scores we couldn't get bought, and when you're a 750 you've done everything right. You've done what you are supposed to do. ... People want to believe that because they didn't over extend themselves they will be ok. They wont realize the problem until it slaps them upside the head and affects them personally."

Nikki, from Arlington, Va., had an issue with trying to buy a newly built home.

"We applied for a new home construction loan and despite of already having equity built into the total price, we were asked to put down 20% of the entire loan amount. In the past the construction loan always took into account the equity in the house as part of the down payment."

And "Jack" from Destin, Fla., relates another tale of businesses getting strangled by the lending freeze:

"Even though we are up to date and have never missed a payment, our credit lines have been 'basically' frozen. My 400,000 sq foot commercial project is sold out to some strong anchor clients and yet they too are having issues due to excessive financing scrutiny. My banker says regulators are forcing all banks to downgrade construction loans to sub-standard in my part of Florida. Perfect credit and a wonderful history do not matter.

"It is very hard to finance a big project like this out of pocket. Not good!"